Tag Archive for: permian

Permian oil output tops 6M bpd and may peak at 7.7M by 2035, but plateau—not decline—is expected, per Wood Mac, despite rising costs and challenges.

The Permian is not done yet

Back in 2017, oil production in the Permian stood at 2.2 million barrels daily. Today, the Permian is producing over 6 million barrels daily, accounting for nearly half of the U.S. total. Predictions of a looming peak have lately multiplied.  According to Wood Mackenzie, the Permian is not done yet—not if prices improve.

To be sure, the boom days seem to be over. Production growth in the most prolific shale play in the United States. It has been slowing already as production costs climb higher while oil prices slide lower. Most forecasts for the region agree that growth in production. It is about to slow down further, and Wood Mac is no exception. The consultancy expects output there to add 200,000 barrels daily this year, for a total of 6.6 million barrels daily.

Going forward, growth is about to continue slowing, and the analysts predicted. Until production peaks at 7.7 million barrels daily in 2035. Yet, while many assume that a peak is inevitably followed by a decline, this will not be the case in the Permian. Output of crude oil in the play will plateau at 7.7 million bpd, and this will more than offset production declines in other producing regions in the country—meaning oil demand will be healthy enough to support such a trend.

Companies with big footprints in the Permian, therefore, can enjoy said footprint even with slower growth. Yet companies tend to seek new growth opportunities all the time to sustain their business, and the prospect of peak growth in the Permian is a real one. The gas-to-oil ratio of output there has been on the rise, as has the water-to-oil ratio in the play. Both trends suggest that some formations in the basin are reaching geological constraints, and more drilling isn’t necessarily proportionate to the oil volumes produced.

Indeed, Big Oil executives have predicted that peak oil supply will arrive in the U.S. before 2035. This does not, of course, mean they are right and Wood Mac analysts are wrong. It simply means that nothing is certain until it happens. And it seems that the slowdown in the Permian is already happening. It also seems that the challenges are multiplying: the latest is concern that toxic wastewater in underground reservoirs could leak and that it could affect seismic activity in the area. In response to these risks, the Railroad Commission of Texas has started imposing restrictions on the amount of wastewater disposed of underground until pressure levels subside.

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Source: Oil & Gas 360

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USEDC to deploy dedicated rig on new acreage as part of its 2025 plan to invest up to $1B in US oil and gas projects.

USEDC expands Permian footprint as part of $1B investment

U.S. Energy Development Corporation (USEDC), a Fort Worth-based exploration and production company focused on developing oil and gas projects. It is for itself and its partners. It has acquired ~20,000 net acres in Reeves and Ward Counties, Texas. The position includes a substantial proved producing component and multi-year drilling inventory to supplement the firm’s existing footprint in the area. This landmark transaction marks the largest single acquisition in the company’s 45-year history and significantly expands its total Permian Basin holdings. Let’s learn more about how USEDC expands Permian footprint.

Dedicated Drilling Rig

“This transaction greatly enhances the overall quality and resilience of our portfolio, supplementing our reserves with additional proved producing assets, adding years of multi-bench drilling inventory, and expanding our operated economies of scale,” said Jordan Jayson, CEO and chairman of USEDC. “These factors position USEDC for sustained, efficient growth and reinforce our commitment to delivering long-term value for our partners.”

USEDC plans to run a dedicated drilling rig on the acquired acreage. It is making this acquisition a key component of USEDC’s 2025 plan to invest up to $1 billion in U.S. oil and gas properties. In 2024, the firm deployed about $850 million in operated and non-operated oil and gas projects in the basin. The firm’s team continues to evaluate opportunities that align with its disciplined investment strategy and can deliver value to our partners.

RBC Richardson Barr advised on the process and Willkie Farr & Gallagher LLP advised USEDC on the acquisition.

Increased Citibank, N.A. Credit Facility</strong>

Concurrent with this acquisition, USEDC completed an increase in the borrowing base and commitments. This is under its syndicated revolving credit facility led by Citibank, N.A. It is from $165 million to $300 million. The upsized revolving credit facility provides USEDC with significant financial flexibility to support its continued growth and has a maximum credit amount of $500 million.

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Source: Oil & Gas 360

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Chevron expects 2025 oil and gas production to rise 6-8% from 2024's 3.34 MMboe/d, according to executives on Jan. 31.

Chevron Forecasts 2025 Permian Production to Climb 9-10%

Chevron Corp., Houston, is forecasting 2025 total oil and gas production will climb. This is 6-8% from last year’s nearly 3.34 MMboe/d, executives said Jan. 31. Analysts expect that growth to pick up in the second half of 2025. Well, all thanks to projects in the Gulf of Mexico and Kazakhstan, but operators in the Permian basin also expect to grow production by about 10% despite receiving less investment. Ready to learn more on Chevron Forecasts 2025?

Mike Wirth, chairman and chief executive officer, and Eimear Bonner, chief financial officer, spoke after Chevron reported its fourth-quarter results—net income of $3.24 billion on revenues of $52.2 billion—and stated that they are focused on capital efficiency and expect to grow Chevron’s free cash flows by $2 billion by the end of 2026.

Lower capital spending will be part of that: Chevron totaled $15.8 billion in capex in 2023 and $16.4 billion last year, investing in projects that helped the company set oil and gas production records, driven in part by the Permian basin output climbing 18% in 2024.

This year, total capex is projected to be about $15 billion. This is with operations in the Gulf of Mexico (Chevron has begun using the ‘Gulf of America’ name instituted by the Trump administration). Moreover, Central Asia is getting more money and Permian assets receiving less (OGJ Online, Dec. 6, 2024). Executives’ initial range for 2026 capex is $14-16 billion.

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Source: Oil & Gas Journal

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Exxon outperforms oil majors, rising 15% despite falling crude prices, with higher production growth and lower costs than rivals.

Exxon Mobil Corp. Beats Estimates on Higher Permian Basin Oil Production

Exxon Mobil Corp. has surpassed analysts’ expectations for the third quarter, driven by a notable increase in oil production from the U.S. Permian Basin, which effectively mitigated the impact of declining crude prices and tighter refining margins. The company reported earnings of $1.92 per share, exceeding the median analyst estimate of $1.87 as compiled by Bloomberg. This performance aligns with a broader trend among major oil companies, as both Chevron Corp. and Shell Plc also delivered results that exceeded market predictions, highlighting a resilient sector amid fluctuating commodity prices.

In a year marked by volatility in the global oil market, Exxon has emerged as the leading performer among major oil producers, with its stock rising over 15% despite a general downturn in international crude prices. This remarkable achievement underscores Exxon’s strategic focus on enhancing oil and natural gas production while reducing operational costs.

Exxon The Largest Energy Explorer

As North America’s largest energy explorer, the company has showcased an impressive capacity for not only expanding its production capabilities but also optimizing operational efficiencies that outpace those of its competitors. This strategic advantage is further underscored by a commitment to leveraging cutting-edge technologies and innovative practices that enhance resource extraction and management. By investing in advanced exploration techniques, the company has been able to identify and tap into previously untapped reserves, thereby significantly increasing its output. This proactive approach not only strengthens its market position but also ensures a sustainable and reliable supply of energy, which is crucial in meeting the growing demands of an ever-evolving energy landscape.

Moreover, the company’s ability to navigate the complexities of the current energy environment—characterized by fluctuating prices, regulatory challenges, and an increasing shift toward renewable energy sources—demonstrates its resilience and adaptability. In aligning its growth strategies with environmental sustainability goals, the company is also positioning itself as a forward-thinking leader in the industry.

By prioritizing investments in renewable energy initiatives and carbon reduction technologies, it not only meets regulatory requirements but also addresses the growing consumer demand for cleaner energy alternatives. This dual focus on traditional energy production and sustainable practices not only enhances the company’s reputation but also secures its future as a key player in the transitional energy economy.

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Source: Energy Connects

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Share of Natural gas produced from the three largest tight oil-producing plays in the United States has increased in the last decade.

Share of natural gas production in US tight oil plays increased over the last decade

Natural gas produced from the three largest tight oil-producing plays in the United States has increased in the last decade. Share of Natural gas comprised 40% of total production from the Bakken, the Eagle Ford, and the Permian compared with 29% in 2014.

Combined crude oil and natural gas production from tight oil plays has seen remarkable growth. It has more than doubled over the past decade. This substantial increase can be largely attributed to the advancements in extraction technologies. Notably hydraulic fracturing and commonly referred to as fracking. It is a horizontal drilling technique. These innovations have revolutionized the energy sector by enabling producers to access previously unreachable reserves of crude oil and natural gas trapped in tight formations. As a result, the landscape of energy production in the United States and globally has shifted significantly, with an expanding array of resources becoming available for both domestic consumption and international export.

Production of Natural Gas

In particular, the production of associated natural gas, which is derived from oil wells primarily producing crude oil, has outpaced the growth of crude oil output during this period. Specifically, natural gas production from these tight oil plays has more than tripled, reflecting a remarkable increase of 22 billion cubic feet per day (Bcf/d). In contrast, crude oil production has more than doubled, resulting in an additional 4 million barrels per day (b/d). This dynamic shift underscores the interlinked nature of oil and gas production and highlights the growing importance of natural gas as a critical component of the energy portfolio. As market dynamics evolve, stakeholders within the industry must adapt to these changes, balancing the extraction of both resources while considering environmental impacts and regulatory frameworks.

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Source: EIA

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Permian producer

Permian producer Matador raises 2024 oil projections to 100,000 bopd

Matador Resources Co., a prominent producer in the Permian Basin, has announced an upward revision in its oil production forecast for 2024, indicating robust growth in the western region of the nation’s most productive oil field. The Dallas-based company now anticipates an average output of 98,500 to 101,500 barrels of oil per day (bopd) next year, reflecting a 5% increase from earlier estimates, where the maximum projection was set at 96,500 bopd.

Throughout this year, Matador has consistently exceeded its production targets each quarter. The company is also witnessing stronger-than-expected production from its newly acquired assets from EnCap Investments LP, which were integrated into operations late in the third quarter.

During the earnings conference call held on Wednesday, executives from Matador Resources Company highlighted the impressive production performance achieved over the recent quarter. They attributed this success primarily to the effective integration of newly acquired assets, which has allowed the company to streamline operations and maximize output. Furthermore, the enhancement of drilling efficiencies has been a critical factor, as advanced techniques and technologies have enabled the team to optimize their drilling processes. Notably, the capability to conduct hydraulic fracturing on multiple wells simultaneously has significantly increased the pace of production, showcasing Matador’s commitment to leveraging innovative practices in a competitive market. This strategic approach not only positions the company favorably against its peers but also demonstrates its resilience in navigating the complexities of the energy sector.

The Global Oil Market

As the global oil market continues to closely monitor U.S. exploration activities, analysts are keenly observing potential indicators of peak growth within the shale production landscape. In this context, Jefferies Financial Group Inc. has revised its forecast for U.S. oil growth downward by 16%. This adjustment reflects a broader trend in the shale sector, where increased consolidation among producers and a focus on operational efficiencies are resulting in a dampening of overall exploration and drilling activity. As companies prioritize profitability and shareholder returns over aggressive expansion, the implications for the future of shale production become increasingly pronounced. The evolving dynamics of this market are likely to influence pricing, supply, and investor sentiment, making it essential for stakeholders to remain vigilant in assessing ongoing developments within the industry.

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Source: Oil & Gas 360

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Chevron

Chevron targets 1 million boe/d Permian production by 2025

Chevron Corporation has set an ambitious goal to achieve production of 1 million barrels of oil equivalent per day (boe/d) from the Permian Basin by the year 2025. The company’s strategic focus is primarily directed towards the Delaware Basin segment of the Permian, located in New Mexico. This region has been identified as particularly advantageous due to its geological characteristics, which include high-quality source rock that is both thick and deep.

According to Duncan Healey, the asset manager for Chevron’s New Mexico operations, the geological attributes of the Delaware Basin allow for greater efficiency in extracting hydrocarbons. The high pressure present in the subsurface formations facilitates the extraction of oil and gas, making this area a more productive option compared to other regions within the Permian Basin.

In addition to its production goals, Chevron is actively seeking to minimize its environmental impact by implementing innovative technologies and practices. The company has prioritized the use of electrical compressors for its operations wherever feasible, as opposed to relying on traditional natural gas-fueled compressors. This transition not only enhances operational efficiency but also contributes to a reduction in carbon emissions associated with production activities.

Hydraulic fracturing operations of Chevron

Furthermore, Chevron has reported a notable decrease in the carbon intensity of its hydraulic fracturing operations in the region, a development that underscores the company’s commitment to implementing sustainable practices within its extraction processes. This reduction in carbon intensity is a significant achievement, reflecting Chevron’s ongoing investment in innovative technologies and methodologies that enhance operational efficiency while minimizing environmental impact. By adopting advanced techniques and optimizing resource management, Chevron is not only improving its operational performance but also demonstrating a proactive approach to addressing the pressing environmental challenges of our time. These efforts are indicative of the company’s broader strategy to integrate sustainability into its core operations, ensuring that environmental considerations are at the forefront of its business decisions.

Through these initiatives, Chevron aims to strike a balance between its production objectives and its responsibilities as a steward of the environment. The company recognizes the importance of addressing the growing concerns related to climate change and resource sustainability, especially in an era where public and regulatory scrutiny is intensifying. By reinforcing its position as a leader in the energy industry, Chevron is taking meaningful steps towards reducing its carbon footprint and promoting a more sustainable energy landscape. This commitment not only enhances the company’s reputation but also aligns with the global shift towards cleaner energy solutions. As Chevron continues to innovate and embrace sustainable practices, it sets a benchmark for others in the industry, illustrating that it is possible to achieve economic growth while prioritizing the health of our planet for future generations.

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Source: Oil & Gas Journal

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Record Oil Production

Record Oil Production in Permian and Bakken Basins

Despite the Biden-Harris administration’s stated objectives to phase out oil and gas production. This is in favor of more sustainable energy sources, recent developments in the Permian and Bakken basins illustrate a contrasting reality. Record oil production is happenning now. These regions, which are pivotal to the U.S. energy landscape, are currently experiencing oil and gas production rates that have not been witnessed in over 13 years. This resurgence in output underscores the complexities of transitioning to greener energy, as it appears that the demand for fossil fuels remains robust. Notably, the Macquarie Group has revised its forecasts, suggesting that U.S. crude production may outpace many analysts’ expectations, indicating a more resilient oil market than previously anticipated.

In the Midland Basin, which spans parts of Texas and New Mexico, operators—including several firms based in Oklahoma—have significantly intensified drilling activities. According to a report by Bloomberg, these companies drilled an impressive average of 47 miles of horizontal lateral wells during the year ending in June, marking a record high not seen since 2011.

The Ongoing Innovation

This remarkable achievement not only underscores the ongoing innovation and efficiency improvements within the energy sector but also provokes critical questions regarding the long-term implications for energy policy and environmental considerations. As production levels continue to rise, it is essential to recognize the transformative impact this growth may have on both local and global markets. Stakeholders—including policymakers, industry leaders, and environmental advocates—must engage in comprehensive dialogues to understand how these advancements can be strategically leveraged to meet increasing energy demands. Furthermore, this raises important inquiries about the sustainability of such production methods and the potential for technological solutions to mitigate adverse effects.

As the industry evolves, the challenge lies in navigating the intricate balance between satisfying immediate energy needs and committing to sustainable practices that align with broader climate goals. This includes exploring renewable energy sources, enhancing energy efficiency, and implementing responsible resource management. By fostering collaboration among diverse stakeholders, the sector can create a framework that not only prioritizes energy security but also promotes environmental stewardship. Therefore, the ongoing dialogue surrounding these developments is crucial, as it will determine the trajectory of energy policies and practices in the years to come, ultimately shaping a sustainable future for generations.

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Source: OK Energy Today

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Ovintiv Inc. is considering a possible sale of its operations in the Uinta basin, which could fetch as much as $2 billion

Ovintiv explores $2 billion Uinta basin business sale to focus on Permian shale operations

Ovintiv Inc. is considering a possible sale of its operations in the Uinta basin. This could fetch as much as $2 billion, people with knowledge of the matter said.

Denver-based Ovintiv is working with an adviser to gauge buyer interest in the asset. The people said they are asking not to be identified discussing confidential information.

Ovintiv’s operations in the Central basin of Utah involve drilling in about 2,600 feet of oil-saturated reservoir rock. This is according to its website. The asset could attract interest from private equity-backed energy groups, the people said.

Deliberations are in the early stages and there’s no certainty they’ll result in a transaction. A representative for Ovintiv declined to comment.

Ovintiv’s shares have fallen 12% over the last 12 months, underperforming the S&P 500 Energy Index and giving it a market value of about $11.2 billion. The company’s assets are spread across Texas, Oklahoma, Utah and Canada.

Selling its Utah assets would free up Ovintiv to focus on the Permian basin, the western hemisphere’s most productive shale fields that straddle Texas and New Mexico, where the driller last year expanded its footprint with a $4.3 billion acquisition from EnCap Investments. The company last year also completed the sale of assets in the Williston Basin of North Dakota for $825 million.

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Source: Oil&Gas 360

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Growing well productivity suggests that operators in the Permian are successfully implementing more advanced drilling & completion techniques

Permian production forecast growth driven by well productivity, pipeline capacity

In our latest Short-Term Energy Outlook (STEO), we forecast that crude oil production in the United States. It will grow to an average of 13.7 million barrels per day (b/d). The market for natural gas production will grow to an average of 114.3 billion cubic feet per day (Bcf/d) in 2025. Most of the forecast growth in oil and natural gas production comes from the Permian region of western Texas and eastern New Mexico. It is where we expect productivity gains, new and expanded infrastructure, and high crude oil prices will support rising production.

In order to better capture drilling activity in several onshore U.S. regions, our STEO now makes use of multiple drilling productivity metrics. The number of active rigs is the first in a sequence of metrics that affects regional production; currently more rigs are active in the Permian region than in the rest of the Lower 48 states combined. We also capture and report the number of new wells that those rigs have drilled each month.

Drilled but uncompleted wells (DUCs) have been drilled but have not yet undergone well completion activities to start producing hydrocarbons. The well completion process involves casing, cementing, perforating, hydraulic fracturing, and other procedures required to produce crude oil or natural gas. Ultimately, when these wells are completed, they begin producing crude oil, natural gas, or both.

Producers make decisions on drilling and completion operations based on market conditions, prices, and infrastructure. A downward trend in the DUC count means producers are completing more wells than they are drilling.

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Source: EIA

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